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The Supreme Court will hear oral arguments in a potential
landmark case later this month that could determine the
future of TV broadcasting and copyrights in America. A New
York-based tech startup called Aereo is under fire for streaming
live television content on the internet, seemingly exploiting a
loophole in copyright law that allows it to “broadcast” without
having to pay retransmission fees, as every other TV service
provider does. Regardless of whether Aereo’s business model is
technically legal, it’s anti-competitive and dangerous for
entrepreneurs, innovators and consumers alike.

Over-the-air broadcasters -- including CBS, ABC, NBC, PBS, Fox
and the CW -- make their programming available for free through
broadcast signals, which home antennas within the range of a
local affiliate station can pick up. For decades, this was the
only avenue through that Americans could watch television, and
although millions still use an antenna, the majority of Americans
now pay for cable or satellite service. Cable and satellite
companies pay broadcasters and their local affiliates fees in
exchange for permission to retransmit their content.

For years, consumers could either watch antenna TV for free or
pay for cable or satellite service, but Aereo is among a group of
entrepreneurial services expanding the market by creating
additional options. The company live-streams broadcast TV on the
internet, and charges customers $8 per month for access. Under
most circumstances, this would be blatant piracy, but Aereo
cleverly exploits a loophole by assigning each of its customers a
miniature antenna at its headquarters. The $8 fee allows
customers to “lease” the antenna from Aereo, which converts the
antenna signal into a digital stream and sends each customer the
content from “their” antenna, effectively selling broadcast TV
without paying for it.

Each step in Aereo’s process is arguably legal -- federal judges have offered differing opinions on the matter -- but
the sum of parts is an anti-competitive business practice that
cuts corners instead of fairly compensating the creators who
make TV programming happen. Exploiting loopholes isn’t
entrepreneurship -- it’s a fly-by-night tactic that leaves a
business prone to collapse should that loophole ever be fixed.
The entrepreneurs behind Aereo deserve credit for trying to
create a new way to deliver television service, but their
decision to take the work and creativity of others --
specifically, TV shows funded by the broadcasting companies --
without paying compensation is indefensible.

Aereo isn’t the only company experimenting with ways to make
television better -- services such as Hulu Plus, Netflix, iTunes
and Amazon Prime all offer access to TV shows for a similar
monthly price, and paid services MLB.tv and WatchESPN offer live
sports content. But unlike Aereo, these services worked with
broadcasters from the beginning and agreed to pay retransmission
fees. The growth of Hulu, Netflix and their competitors has been
a win-win for all parties involved -- consumers have more
options, entrepreneurs succeed, and broadcasters are compensated
-- but Aereo missed its opportunity to join in this success by
opting to game the system, not work with it.

Television programming is a form of intellectual property, and a
program -- whether a scripted show such as a sitcom or a live
news or sports broadcast -- belongs to its producer, who sells
the program’s rights to a broadcaster. That broadcaster holds
exclusive rights to distribute the product, and cable and
satellite companies must pay the broadcaster in order to stream
the program. If producers and broadcasters don’t have avenues to
recoup their investments and profit off their creative content,
they’ll have little incentive to continue innovating.

It’s one thing to copy a business model and build off a great
idea to make it better. It’s another to blatantly copy a digital
product and sell it as your own to consumers.The entrepreneurs
behind Aereo can’t be faulted for trying to make television more
consumer friendly, but they made the fatal mistake of trying to
reproduce the work of others for a quick buck instead of building
something original and sustainable.

Now, instead of being on a path to long-term growth, Aereo’s fate
hinges on the outcome of a Supreme Court case that could force it
to shut down. A win for Aereo would be a loss for everyone else,
weakening IP protections and opening the door for more firms to
bend the rules and profit off the creativity of others.